CD prices officially dropped. It's about time.

[Natoma]

http://www.wired.com/news/digiwood/0,1412,60293,00.html

The world's largest recording company said Wednesday it would slash wholesale CD prices in a bid to revive lagging music sales, which have dropped 31 percent industrywide in the last three years.

Universal Music Group said it would cut the suggested sale price on a majority of its CDs by $6 to $12.98. The company hopes retailers will follow its lead and drop their CD prices to around $10 or less. The price changes would go into effect by Oct. 1.


.....

UMG's current wholesale price for a CD album is $12.02, with a manufacturer suggested retail price of $18.98. Under the new pricing structure, the wholesale price would be $9.09.

.....

Josh Bernoff, an analyst with Forrester Research, said the decision to cut prices underscores how badly the industry has been hurting.

"That is very significant," he said. "That's basically saying 'we give up.'"


.....

The RIAA blames the sales slump largely on illegal music swapping over peer-to-peer networks and is aggressively targeting people who share music online.

But industry critics say the record companies have, for more than a decade, ignored the effects of soaring CD prices on sales. They also contend the artistic quality of music has deteriorated.

I think that's the most important part of this whole thing. Artificially high pricing and crappy music. Used to be I could purchase a CD and listen to the whole album. Today you're lucky if you get a couple of good tracks.

Anyway, it's about time the music industry did this. Thank goodness for the net. I have no clue how they could justify selling CDs for $18-22 when you can purchase a DVD for the same price. And I'd consider a DVD, with it's behind the scenes applications, a far far better value than a CD.

I wonder if they factor in the fact that millions of people now have vast DVD collections rather than CD collections as one of the reasons for the precipitous decline in CD sales. Also the fact that many people are spending their money on video games for consoles as the market has expanded tremendously in the past 5-10 years.

 

[jvd]

The problem is there is no new tech in that sector.

They need to push for dvd music . Throw in the videos for all the tracks and push for the lcd screen dvd recievers in cars. There needs to be something new .

But yea i don't buy cds cause i only want to listen to 1 or 2 songs on the cd. This year i bought the new metallica cd , chicago cd , linkin park cd and afi . Afi i got for 7$ , metallica for 10$ and linkin park for 10$. That is how it should be priced. Heck mabye even less. Getting a cd for 5 bucks less than a dvd is a bit of a rip.

 

[pax]

If they really 'gave up' they would be reissuing all those old albums in mp3 format now...

 

[Joe DeFuria]

I think that's the most important part of this whole thing. Artificially high pricing and crappy music.

There's nothing artificial about it. It's called supply and demand. If people are willing to pay it, it's not artificial.

The fact that people are at this point not willing to pay it, is what's prompting the lower prices. Supply and demand.

Used to be I could purchase a CD and listen to the whole album. Today you're lucky if you get a couple of good tracks.

Then don't buy it, and if enough people agree, they will have to lower the price.

I have no clue how they could justify selling CDs for $18-22 when you can purchase a DVD for the same price.

The price is by definition justified when enough people are willing to buy it at that price. Doesn't matter if they're making 1% or 1000% profit margins.

 

[Humus]

The problem is that CD sales has been declining for a while now, without any reaction from record companies other than going harder with lawyers hunting piracing. The demand has gone down, but prices have rather gone up. You could call it bad way of doing business, both for themselves and for consumers, higher prices with lower return. Lowering the prices and I'm sure they will make more money than with current prices. The music industry has also been very slow at adopting new technology. Only very recently has any real online music distributors appeared that sell downloads of individual tracks, a product that anyone would argue that there has been a lot of demand for, yet there's been zero supply.

I'd love to see more direct competition in the music sector. If I want music of artist X, then I have to buy the CD from company Y that artist X happends to have contract with. I would like to see more power handed over to the artist, and artists selling their work to distributors who can then compete about selling the same or similar product of the same artist.

 

[Joe DeFuria]

The problem is that CD sales has been declining for a while now, without any reaction from record companies other than going harder with lawyers hunting piracing.

Which there's nothing wrong with.

The demand has gone down, but prices have rather gone up.

Also nothing wrong with, if they are happy with the profits and volume.

The music industry has also been very slow at adopting new technology.

Lots of businesses are slow to change their models. It requires lots of risk and large investments. Can't blame companies for resisting change. You can stop buying their products which makes the risks for not[ changing, heavier than changing.

Only very recently has any real online music distributors appeared that sell downloads of individual tracks, a product that anyone would argue that there has been a lot of demand for, yet there's been zero supply.

Sure...so why haven't you personally instituted this, and offered it to musicians? (Answer: it takes an investment and is a risk).

I'd love to see more direct competition in the music sector.

There's plenty of competition. How many different artists are out there?

If I want music of artist X, then I have to buy the CD from company Y that artist X happends to have contract with.

No, not "just happens" to have a contract with him. Company Y has a contract with Artist X because the artist X doesn't want to have to deal with the costs and risks and leg work of actually marketing and distributing their own music.

I would like to see more power handed over to the artist,

Not all artists want to deal with that power. That power comes with a cost, and having musical expertise has little to do with business expertise or technical knowledge required to market and distribute your product.

....and artists selling their work to distributors who can then compete about selling the same or similar product of the same artist.

Not too dissimilar from artists selling themselves (contracts) to publishers who all compete for that artist. Or do you think there won't be "exclusive artists / distributor" deals in the electronic distribution market?

 

[Humus]

I'm not saying they have anything morally wrong, or anything of that sort. Just that demand and supply, like in many other area, aren't quite as perfect as it sounds in theory. Demand changes, and the industry is very slow at adopting. Meanwhile there's consumers with a demand for a product, but are left in void. It's not like nobody has suggested selling music online for the last number of years. The industry just have been unwilling to change to meet the demand, and rather demanded that the consumers change to fit their needs. A large part of the consumer base don't want CD's, they want mp3 files. Since noone offers this product, piracy comes as a direct effect of this. Instead of seeing that their product didn't match the market, they were trying to squeeze the market into their business model by using stuff like copy-protection on CD, which is outright stupid since it only punishes the innocent, he who actually bought the CD, rather than the guy who downloaded a piracy copy from the net. Had there been more competition in the business, then most likely someone would have tried to be first with the idea, but as it is today all companies gets together the same umbrella through organisations like RIAA. You could call it a cartel to some extent. Would each distributor be completely independent I don't think we would have this situation.

As for my other point, I think you misunderstood what I said. I fully understand that artists need to have contracts with a distributor. When I said artist X happened to have a contract with company Y, then I meant that as instead of having contract with say company Z, rather than not having a contract at all. But I would like to see a situation where artist X can have a contract with not only company Y, but also Z, W, Q, H and T. These can then distribute the music, assemble CD's or providing them online, MD, DVD or whatever media they prefer. Since the same or similar products would be available from many companies then there would be real competition in the industry. Today there's only the choice between choosing artist X vs. artist Y, but you have no real choise of which distributor to buy from. The buyer spends his money on music from his favourite artist X, and lowering the price of artist Y doesn't make a difference unless he also likes artist Y. The competition gets semi-impotent in the current system.

 

[nelg]

It’s interesting how the retailer is taking more of the brunt than the record companies.

Joe, I usually would find myself in accordance with your free market principles. In the case of record companies though, they seem to operate in collusion with one another. With their control of distribution and influence on what music gets played on the radio it is hard (not impossible) to break into the music scene as an outsider.

 

[zurich]

CDs still suck.

I used to have over 400, then sold them all when the MP3 wave hit. Now I have a handful, and those were just too scratched up to sell.

Last CD I actually bought was Einsturzende Neubauten's 'Silence is Sexy' a few years ago, and that's just cause the packaging was cool

 

[jvd]

I don't have a problem with cds. Its just that its not new. its not the it thing . I don't think mp3s will be the it thing. It has a certian stigma now. They need to take advantage of a new media. Thats why i was thinking dvds Would be great. Sell the dvds with the music videos on it . IT will work really well. But i doubt they'd want to do it. They'd need to make videos for every song and in turn all the songs have to be good. Last see cd i bought like that was metallica black album and i was like 8 or 9 years old for that one .

 

[Natoma]

I think that's the most important part of this whole thing. Artificially high pricing and crappy music.

There's nothing artificial about it. It's called supply and demand. If people are willing to pay it, it's not artificial.

The fact that people are at this point not willing to pay it, is what's prompting the lower prices. Supply and demand.

Used to be I could purchase a CD and listen to the whole album. Today you're lucky if you get a couple of good tracks.

Then don't buy it, and if enough people agree, they will have to lower the price.

I have no clue how they could justify selling CDs for $18-22 when you can purchase a DVD for the same price.

The price is by definition justified when enough people are willing to buy it at that price. Doesn't matter if they're making 1% or 1000% profit margins.

Considering that the prices were created due to a monopoly, that is most certainly artificial. There is basically no other way to have your music published on a wide scale unless you go through the "big 5" RIAA companies, who also happen to set the prices for the media and the music.

It would be true supply and demand if there weren't a monopoly in the music industry. But this is not the case. Market forces simply don't apply in that scenario.

However, as we can see with the internet and napster/fast track clients/gnutella/et al, that has created a de facto monopoly buster, which has allowed market forces to return, thus UMG lowering their prices.

 

[Joe DeFuria]

Considering that the prices were created due to a monopoly, that is most certainly artificial. There is basically no other way to have your music published on a wide scale unless you go through the "big 5" RIAA companies, who also happen to set the prices for the media and the music.

Hogwash.

There's nothing prventing anyone from distributing their own music. All it takes is an investment. Significant investment? Yup. Huge risk? Yup.

It would be true supply and demand if there weren't a monopoly in the music industry. But this is not the case. Market forces simply don't apply in that scenario.

Bah...more music conspiracy theories...

However, as we can see with the internet and napster/fast track clients/gnutella/et al, that has created a de facto monopoly buster, which has allowed market forces to return, thus UMG lowering their prices.

You mean there were OTHER investments in distribution? Correct. Like I said...someone make investments, and take the risk, and you can have music distributed.

 

[Natoma]

And what you're missing is that there is a huge difference between licensing music rights and having to press your own CDs and Cassettes and distribute those CDs and Cassettes as opposed to licensing music rights and being able to distribute over the internet. The risk is *severely* diminished as witnessed by iTunes, Pressplay, Buymusic, et al.

This isn't a normal market place, and anyone who isn't blind can see that the RIAA present a monopoly. This isn't music conspiracy theories at all, but pure fact. In fact, the courts even ruled that the RIAA form a de facto monopoly and ordered them to pay damages. You do remember this settlement no? Why do you ignore this and parrot "oh it's just conspiracy theories!" It's already been proven that the RIAA used it's monopoly power to gouge consumers for years.

The internet and internet related distribution changed everything. For music, it effectively broke up the distribution monopoly that the RIAA maintained over the entire music industry.

 

[Joe DeFuria]

And what you're missing is that there is a huge difference between licensing music rights and having to press your own CDs and Cassettes and distribute those CDs and Cassettes as opposed to licensing music rights and being able to distribute over the internet. The risk is *severely* diminished.

Right, and so are the services. Putting your own MP3 on the internet doesn't get it Radio time, doesn't get any marketing or anything.

This isn't a normal market place, and anyone who isn't blind can see that the RIAA present a monopoly.

Anyone who isn't blind can see that traditional music publishers do more than "just" distribute media.

This isn't music conspiracy theories at all, but pure fact.

Please.

In fact, the courts even ruled that the RIAA form a de facto monopoly and ordered them to pay damages. You do remember this settlement no?

I have a sneaking suspicion that "defacto monopoly" isn't anywhere in the ruling. Correct me if I'm wrong though.

The internet and internet related distribution changed everything.

Yes, it changes a lot...just as it changes lots of businesses.

For music, it effectively broke up the distribution monopoly that the RIAA maintained over the entire music industry.

If it could break it up, then it wasn't a monopoly, was it?

 

[Natoma]

And what you're missing is that there is a huge difference between licensing music rights and having to press your own CDs and Cassettes and distribute those CDs and Cassettes as opposed to licensing music rights and being able to distribute over the internet. The risk is *severely* diminished.

Right, and so are the services. Putting your own MP3 on the internet doesn't get it Radio time, doesn't get any marketing or anything.

Who's talking about radio time and marketing? I've stated distribution, which is what this article is speaking on, i.e. the high cost of CDs.

This isn't a normal market place, and anyone who isn't blind can see that the RIAA present a monopoly.

Anyone who isn't blind can see that traditional music publishers do more than "just" distribute media.

Again, that's not the point of the article, nor is it the subject of what I stated earlier. If you want to discuss marketing and radio time and all the other things that go into getting an act "out there," then we can do that. But this discussion is about distribution only.

In fact, the courts even ruled that the RIAA form a de facto monopoly and ordered them to pay damages. You do remember this settlement no?

I have a sneaking suspicion that "defacto monopoly" isn't anywhere in the ruling. Correct me if I'm wrong though.

I've looked for the ruling on google but there seems to be no mention of it. The only ruling I've found, strangely enough, was the napster ruling in which it was ruled that while napster was illegal, the RIAA maintained a monopoly in distribution. It was said that that monopoly could be argued as illegal, which is where the settlement against the RIAA for collusory price gouging of consumers arose.

For music, it effectively broke up the distribution monopoly that the RIAA maintained over the entire music industry.

If it could break it up, then it wasn't a monopoly, was it?

The courts would disagree with you.

 

[Joe DeFuria]

Who's talking about radio time and marketing? I've stated distribution, which is what this article is speaking on, i.e. the high cost of CDs.

You can just state "distribution" all you want. That doesn't change the fact that "traditional" music publishers do much more than just distribute.

Again, that's not the point of the article, nor is it the subject of what I stated earlier. If you want to discuss marketing and radio time and all the other things that go into getting an act "out there," then we can do that. But this discussion is about distribution only.

Says you?

I've looked for the ruling on google but there seems to be no mention of it.

Why am I not surprised.

It was said that that monopoly could be argued as illegal, which is where the settlement against the RIAA for collusory price gouging of consumers arose.

Of course it can be "argued" to be illegal. You can argue anything.

 

[Natoma]

You can just state "distribution" all you want. That doesn't change the fact that "traditional" music publishers do much more than just distribute.

Why do you keep bringing this point up? No one is arguing this.

Again, that's not the point of the article, nor is it the subject of what I stated earlier. If you want to discuss marketing and radio time and all the other things that go into getting an act "out there," then we can do that. But this discussion is about distribution only.

Says you?

If you want to discuss it with me in particular, then yes. I'm talking about distribution. I'm not talking about what other functions the RIAA companies serve. Neither is the article.

I've looked for the ruling on google but there seems to be no mention of it.

Why am I not surprised.

Ye of little faith.

http://news.com.com/2100-1023_3-244195.html?tag=mainstry

A coalition of 28 states filed suit against the major record labels today, alleging that they and several U.S. retailers have illegally conspired to prop up the prices of compact discs.

.....

The suit, which is filed in U.S. District Court in Manhattan, follows an investigation by the Federal Trade Commission into a similar accusation of CD price fixing. That issue was settled in May when the record labels agreed to drop their controversial pricing agreements with retailers. The record labels did not admit wrongdoing.

.....

The FTC has estimated that the potential harm to consumers as a result of the pricing agreements could reach $480 million. The states have not yet set a price tag on their suit, however.

From August 2000. Now I'm looking for the actual ruling which was released either late 2002 or early 2003. I haven't been able to find it yet however. Google is a bitch sometimes.

It was said that that monopoly could be argued as illegal, which is where the settlement against the RIAA for collusory price gouging of consumers arose.

Of course it can be "argued" to be illegal. You can argue anything.

enough with the semantics. It was successfully argued and penalties were implemented against the RIAA.

As soon as I find the ruling, I'll post it.

 

[Joe DeFuria]

Why do you keep bringing this point up? No one is arguing this.

I see there's just no point in discussing things with you.

If you want to discuss it with me in particular, then yes. I'm talking about distribution. I'm not talking about what other functions the RIAA companies serve. Neither is the article.

Then you and the article are looking at one issue in a vacuum that is not reality. Good for both of you.

Ye of little faith.

Still waiting...

A coalition of 28 states filed suit against the major record labels today, alleging that they and several U.S. retailers have illegally conspired to prop up the prices of compact discs.

.....

The suit, which is filed in U.S. District Court in Manhattan, follows an investigation by the Federal Trade Commission into a similar accusation of CD price fixing. That issue was settled in May...

GOSH! A settlement. Eureka! What a find you have there.

Keep searching....

enough with the semantics. It was successfully argued and penalties were implemented against the RIAA.

Still waiting to see what the penalities were, the corrective action required, and the basis for the ruling.

As soon as I find the ruling, I'll post it.

OK.

 

[Joe DeFuria]

Oh, and BY THE WAY, your "article" says the following:

But industry critics say the record companies have, for more than a decade, ignored the effects of soaring CD prices on sales. They also contend the artistic quality of music has deteriorated.

"This is something that the industry has failed to address ... You could make downloading music go away tomorrow and the industry would still face challenges," said Sean Baenen, managing director of Odyssey, a consumer marketing research firm in San Francisco. "All the data suggests that quality and price are major factors to the equation."

That, Natoma, is the result of market forces.

 

[Natoma]

Why do you keep bringing this point up? No one is arguing this.

I see there's just no point in discussing things with you.

Maybe if you made a point to discuss we could do so? :?

A coalition of 28 states filed suit against the major record labels today, alleging that they and several U.S. retailers have illegally conspired to prop up the prices of compact discs.

.....

The suit, which is filed in U.S. District Court in Manhattan, follows an investigation by the Federal Trade Commission into a similar accusation of CD price fixing. That issue was settled in May...

GOSH! A settlement. Eureka! What a find you have there.

Keep searching....

Uhm, that was a related case that was settled. Not the one brought by the states. They're separate cases.